Big, Long, and Juicy Job of Management Consulting
MBB advisors work around the clock in a different market
In early 1990’s, I joined a global beverage company in Atlanta, GA. It was a dream job of local residents who admire a dark soda to cure the head ache around the globe. It was an invention of chemists by accident. Blended with a sip of liquid in seven different ingredients of 7X, the soda produced ever-lasting profit for Coca-Cola Company for long time. I was proud of myself being offered with a jobb y an incredible marketing firm in America.
But the internal work was surrounded by legacy system engineers in the old-generation programmers of COBOL or third generation language. No business discussion emerged in internal meeting. No fresh ideas surfaced until management consultants came to the office in Shibuya, west of Tokyo. I was pulled in by the project meetings of a lot of consultancies such as PWC, Accenture, E&Y. McKinsey also joined as the external force to remodel Coca-Cola business in Japan. My career aspiration has changed to become a business consultant and indeed became one of Kurt Salmon Associates, Atlanta-based consultancy in focus on retail and comsumer packaged good industry.
On October 8th, 2022, a news story of management consultants pleased readers of the past experience with corporate consigliore. The story was written by a former Bain consultant. This story writer began it with a book of New York Times, “When McKinsey Comes to Town,” by Walt Bogdanich and Michael Forsythe. Despite the scandals in South Africa’s tax office and a close tie to Saudi Arabian rulers, the work of MBB, McKinsey, Boston Consulting Group, and Bain & Company is on the rise.
In 2020, the trio grew their revenues by three times in five years to $24bn. A year later, the dominant three have added $6bn to a whopping $30bn, which explains that the nature of work has shifted from advising to advising and building. The consultants of MBB acquired bigger, longer, and juicer fees. Management consulting is the most popular job of MBA graduates. But the climate in Tokyo is not as good as it looks in large cities of America.
There are three genuine threats to meet a growing demand in the industry in Tokyo; shortage of MBAs, unpopular topic of ESG, and a strange word of digital transformations. For a start, fewer and fewer Japanese go to America to obtain MBA at business school because of rising tuition and uncertainties in business. Accelerating academic cost toward bachelors’ degree also discourages young business minds to pursue advanced degree in business. The average expense of twenty-year pre-occupational period has grown to $300 a month for public schools whereas the liberal training at private institutions charge a monthly expense of $900, three times as high as public ones. That is very heavy burden for parents to send their children to a full-grown talents.
The second intellectual attempt annoys corporate executives who don’t know how to start with environmental, social and governance justifications in business. Consultants offer new services to remodel the business to decarbonize the planet, diversify the workforce with more women participating in managerial responsibilities, and assign leaders into virtuous practices. Yet Japan fell behind the achievement, far below the expectations. For example, the glass-ceiling index of female involvement business provides disappointing results for years after years to stakeholders of listed firms in Tokyo. Governance is premature.
Female managers still fell to 15% in managerial work and 11% in the board of directors. Japan stands at 121st in the world-wide survey. World Economic Forum estimates that it takes 135 years to close the gender gap in Japan. No one has never seen and will have seen the equality for a long time. The first time I heard the virtuous compensation of equal pay for equal work goes back to 1980, more than four decades ago. Japan has not made any progress to close the gap.
The third and perhaps the worst misery lie in a strange expression of digital transformation. This often means selling product online and automating business processes in internal office work. Corporate executives see little merits by launching digital tools in computer terminals. Software application often comes in free service in Tokyo, piling on developmental costs by high-charging fees from business consultants unfamiliar with technical details. Accenture is an exception.
The current revenue growth in consultancies depicts the upward slope but the trios in Tokyo might not have seen the same trend because Asian market is quite different from America’s. In my personal experience, I witnessed quite a different challenge in the work of advising customers in business.